Carbondale to seek 6% tax on short-term vacation rentals

The Days Inn and Comfort Inn and Suites in Carbondale will be spared a possible increase in the town's lodging tax this year, but town trustees will ask voters this fall for a new tax on short-term vacation rentals.
Chelsea Self/Post Independent

Carbondale voters are to be asked this November whether to impose a 6% excise tax on private home vacation rentals to help bolster the town’s affordable housing fund.

The town’s trustees on Tuesday, though, decided to “pump the brakes” on a separate ballot question to increase the existing tax on hotels and other types of lodging.

The town board voted 7-0 at its regular meeting to prepare a ballot question aimed at Carbondale’s newly regulated stock of short-term vacation rentals.

Homeowners who rent out all or a portion of their homes for vacation stays are now required to obtain a town license to do so. Monday is the deadline to apply for full home rentals this year. Owners who use their homes as a primary residence and rent out only a room or attached unit, or who have property in the town’s Historic Commercial Core zone district, can apply at any time, under the town’s new rules.

The potential for an extra tax on short-term rentals (STRs) and/or a boost in Carbondale’s existing 2% lodging tax has been discussed in recent months as a way to address the demand for more affordable housing.

“Everyone is doing something related to this,” Trustee Colin Laird said, referring to a new state law that allows lodging tax funds to be used to address housing needs.

The law applies only to county governments and special tourism marketing districts, but it sparked conversations at the municipal level across Colorado to look at various tourism-oriented tax dollars to address the growing need for affordable workforce housing.

Laird noted that, given the relatively small number of STRs in Carbondale, the new tax is likely to generate only about $150,000 to $180,000 a year.

“We’re not solving our affordable housing problem with that,” he said. “But we have talked about small steps building up to bigger steps, and this is one of those first steps.” 

The town has also been discussing a possible hike in the lodging tax on hotels, motels and bed and breakfasts, but trustees decided to let that one sit for now.

Trustee Marty Silverstein said he worried about the potential for two new taxes coming across as asking for too much at once, and that they could end up competing against each other.

Local lodge owners have also expressed some concerns about increasing the tax too much, and would like to see a more-detailed plan for how that extra money would be used.

In addition to dedicating some of the revenues from a higher lodging tax for housing needs, the town’s Tourism Council has recommended using funds to address some of the impacts of tourism, such as transportation infrastructure, trails maintenance and ways to encourage tourists to lessen their carbon footprint.

Trustees agreed it would be better to iron out those details and look at another ballot question related to the lodging tax next year.

“I think it’s worth a year of really working with the lodging groups to come up with a plan,” Mayor Ben Bohmfalk said.

The STR tax, on the other hand, is one that doesn’t impact local taxpayers directly, since it’s paid by the vacationers who rent the properties, he and the six trustees agreed.

Because hotels pay a higher commercial property tax rate, and the owners of vacation rentals pay the lower residential rate, it also “levels the playing field,” Silverstein said.

The excise tax on STRs would, however, be on top of the town’s lodging and regular sales taxes, which are also imposed on vacation rentals.

Trustee Erica Sparhawk said it’s possible the town may also want to consider a separate tax proposal more specifically related to housing, maybe tied to a bond issue, as opposed to increasing the lodging tax.

Senior Reporter/Managing Editor John Stroud can be reached at 970-384-9160 or

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